Rivals Disney, Netflix, Microsoft, Apple, Google and Facebook all find themselves on the same side regarding Reliance Jio.
It may seem strange that rival tech titans FANG (Facebook, Apple, Netflix and Google) as well as Microsoft and Disney are now bundled together onto a common platform through huge investments, equity exposure and technology interfaces but that’s exactly what happened thanks to India’s Reliance Jio (Jio). Google bought a $4.5 billion 7.73% stake in Jio one day before announcing a $10 billion dedicated India fund to counter Facebook’s $5.7 billion investment effort in the country. All this happened in the last six weeks as Jio mobilized $20 billion in investments from 13 prominent technology investors and digital companies.
“When Facebook announced its investment in Jio, little did anyone know that 12 other investments would follow. Google partnership adds another technology offering for Jio. Now they (Jio) not only provide the phone and the network, but they can also provide the operating system in the phone via the newly proposed Google and Jio joint development plans” said Vikram Shah, co-founder and CEO of California-based investment advisor, Vested Finance.
Back in July 2018, when Reliance acquired US-based telecom software firm Radisys, independent consultancy Deloitte said the move was aimed at preparing for an ambitious foray into 5G, Internet of Things (IoT) and offering high-end digital services. Reliance also acquired another 4G software developer, Rancore Technologies, a year earlier.
These acquisitions seem to have paved the way for Reliance head honcho Mukesh Ambani announcement at the first virtual annual general meeting of investors last week that it was ready with 5G technology and could rollout high-speed digital services immediately after the government auctions 5G spectrum next year.
Well, coming up with home-grown 5G technology, operating system and entry-level cost effective mobile phone would put a large number of top telecom companies on notice including known brands like Nokia, Ericsson, Samsung and Chinese firms, Huawei, ZTE that are facing heat from lawmakers in several geographies including US, UK and India on reported security concerns.
Credit Suisse, in a note told investors that recent partnerships entered into by Jio had “…great potential to offer services across verticals like education, healthcare, agriculture, financial services, enterprise services, IoT and entertainment apps.”
What seems to have energized foreign investors’ interest in Jio is the increasing dominance of Jio Platforms in India with the country’s internet users expected to reach a whopping 800 million in next two years from roughly 350 million today.
That nine out of ten smart phones in India come with Android operating system and Google’s popularity on videos, maps and email will help immediately cash-in on the partnership with Alphabet led by Sundar Pichai who made a fleeting presence at Reliance investors meet to announce the investment in Jio.
Interestingly, Jio’s push for 5G and homegrown smartphone may translate into business risk for rival telecom companies: Bharti Airtel led by Sunil Bharti Mittal and Idea Vodafone stewarded by Kumar Birla, two respected names in Indian corporate world.
Goldman Sachs Equities Research said that the risk was due to the fact that “feature phone segment contributed about 30 percent of Bharti and Idea Vodafone wireless revenues.”
Given the competitive market in India across telecom and digital space, both Bharti and Idea Vodafone are expected to rollout their competitive corporate plans shortly, analysts averred.
But, Morgan Stanley in a research note post-Reliance announcement have pointed to huge potential that JioMart that has linkages with two thirds of 12,000 retail stores in tier two & four towns. Morgan Stanley researchers led by Mayank Maheshwari based in Singapore also emphasized the business potential in Jio’s new business segments like conferencing and JioGlass.